Dow Jones futures rose modestly Thursday morning, along with S&P 500 futures and Nasdaq futures.
The stock market rally pulled back Wednesday amid key resistance. The major indexes initially pared losses following the release of Fed minutes from the July 27-28 meeting, but faded again by the close.
Apple cleared a trendline entry, with the megacap stock technically actionable ahead of an official breakout.
Chip design firm Synopsys and lagging Dow Jones tech giant Cisco Systems reported late Wednesday. SNPS stock rose slightly and Cisco stock popped in extended action on strong earnings and guidance.
Lithium giant Sociedad Quimica y Minera de Chile released mixed results very early Thursday. SQM stock fell in premarket trade.
BJ's Wholesale, a rival to Costco Wholesale, beat views before the open. BJ's stock rose solidly, signaling a move above a buy point Costco is just in a buy zone.
BBBY Stock Tumbles
Meanwhile, newly revived meme stock Bed Bath & Beyond fell more than 10% early Thursday, but well off overnight lows. BBBY stock rose 12% to 23.08 in Wednesday's session, but closed near session lows after hitting a five-month high of 30 intraday.
Shares jumped 29% in massive volume on Tuesday as GameStop Chairman Ryan Cohen disclosed he still owns BBBY stock along with significant out-of-the-money options.
But late Wednesday, Cohen disclosed his intention to completely exit BBBY stock.
GME stock, the original meme stock, retreated overnight after falling 4% Wednesday. AMC Entertainment, another meme stock, fell 14% in the regular session.
Fed Minutes
Federal Reserve policymakers at the late July meeting agreed that further rate hikes are necessary, according to the newly released Fed minutes.
Declining commodity prices, including energy, aren't enough, according to the Fed minutes, with policymakers stressing that inflation pressures are broad-based. But they also worried about slowing the economy too much.
They didn't seem concerned that financial conditions eased since the June meeting, including lower Treasury yields and a stock market rally.
All in all, the Fed minutes held no hawkish surprises, slightly easing rate hike expectations.
Still, markets now see a 61.5% chance of a 50-basis-point Fed rate hike on Sept. 21. Earlier Wednesday, before the Fed minutes release, odds were about evenly divided between a half-point move or a third straight 75-basis-point move.
Costco stock is on IBD Leaderboard and SwingTrader. SNPS stock is on IBD Long-Term Leaders. Synopsys and SQM stock are on the IBD 50.
Dow Jones Futures Today
Dow Jones futures rose 0.2% vs. fair value. S&P 500 futures climbed 0.2%. Nasdaq 100 futures advanced 0.3%. CSCO stock is a member of the Dow Jones, S&P 500 and Nasdaq composite.
Crude oil futures rose more than 1%. Natural gas futures added 1.5%.
Copper prices climbed over 1%.
The 10-year Treasury yield fell 4 basis points to 2.85%.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
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Stock Market Rally Wednesday
The stock market rally saw losses across the major indexes after a mixed outing on Tuesday.
Fed minutes ultimately didn't change the major indexes much.
July retail sales were flat, the Commerce Department reported Before Wednesday's open. That was slightly below views. But sales excluding autos and gasoline climbed 0.7%, bolstering expectations that the U.S. economy is returning to growth in the third quarter.
The Dow Jones Industrial Average fell 0.5% in Wednesday's stock market trading. The S&P 500 index lost 0.7%. The Nasdaq composite declined 1.25%. The small-cap Russell 2000 slumped 1.7%.
U.S. crude oil prices rose 1.8% to $88.11 a barrel, ending a three-day losing streak. U.S. crude and gasoline inventories fell sharply in the latest week, far more than expected. Gasoline demand over the past four weeks hit a 2022 high.
The 10-year Treasury yield jumped 10 basis points to 2.89%. That's a four-week high, but still below its 50-day line.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF fell just over 1%, while the Innovator IBD Breakout Opportunities ETF shed 0.5%. The iShares Expanded Tech-Software Sector ETF slumped 1.7%. The VanEck Vectors Semiconductor ETF retreated 2.15%. SNPS stock is in the IGV and SMH ETFs.
SPDR S&P Metals & Mining ETF declined 2.7% and the Global X U.S. Infrastructure Development ETF sank 1.1%. U.S. Global Jets ETF descended 2.5%. SPDR S&P Homebuilders ETF shed 1.7%. The Energy Select SPDR ETF gained 0.8% and the Financial Select SPDR ETF slipped 0.5%. The Health Care Select Sector SPDR Fund fell 0.6%.
Reflecting more-speculative story stocks, ARK Innovation ETF tumbled 5.3% and ARK Genomics ETF 5.1%.
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Apple Stock
Apple stock, a member of the Dow Jones, S&P 500 and Nasdaq composite, rose 0.9% to 174.55 on Wednesday. AAPL stock moved above a down-sloping trendline going back to early January. That offers a buying opportunity.
The official buy point is 183.04, according to MarketSmith analysis. Investors could view the Apple stock chart as an awkward double-bottom base with a 179.71 entry.
AAPL stock rose in volume that was slightly above normal. But most of its strong uptrend over the past two months has been on below-average trade. The tech titan could use a break. A handle would create a lower buy point and let the moving averages catch up.
Apple stock is outperforming other megacaps and the broader market: Its relative strength line, the blue line in the charts provided, has been hitting record highs for a few weeks.
Key Earnings
SQM earnings surged 871% vs. a year earlier, but still missed views. Revenue leapt 342%, beating. SQM stock fell 2% before the open. Shares dipped 1.2% to 104.42 on Wednesday after skidding 5.1% Tuesday in a downside reversal. SQM stock is working on a 115.86 cup-base buy point. Shares topped a 99.84 early entry last week from a too-low handle, but could test that area on Thursday. A proper handle would be ideal for SQM stock.
Lithium rivals Albemarle and Livent both reported strong earnings earlier this month, with the industry giant Albemarle sharply raising guidance yet again. ALB and LTHM stock edged lower in premarket trade.
Synopsys earnings topped views while guidance also was strong. SNPS stock rose modestly early Thursday. Shares fell 1.2% on Wednesday to 381, holding above an official 377.70 buy point. Synopsys stock already cleared some early entries in late July and is still well above its 50-day line. If shares pause near the top of the base, that could create a buying opportunity.
Rival Cadence Design Systems, also above an official buy point, was little changed.
Cisco topped fiscal Q4 views and guided up for Q1. CSCO stock rose solidly in extended trade. Shares edged down 0.2% to 46.66 on Wednesday. Cisco stock rallied modestly from its early July lows, but is far below its falling 200-day line.
BJ's Wholesale topped Q2 views and raised full-year revenue and same-store sales guidance. BJ's stock rose 5% in premarket trade, set to reclaim a 71.10 buy point. Shares shed 0.2% to 69.13 on Wednesday.
COST stock rose 0.6% to 556.32 on Wednesday, holding above a 552.81 cup-with-handle buy point.
Market Rally Analysis
A day after the S&P 500 stopped just short of the 200-day moving average, the major indexes pulled back Wednesday. The Fed minutes moved stocks but they ultimately closed about where they were at 2 p.m. ET.
Small caps and highly valued growth stocks were the biggest losers, but declines were broad-based outside of energy.
The Dow Jones held support at its 200-day line. The Russell 2000 undercut that key level. The S&P 500 and Nasdaq have not reached it.
The market rally has come a long way from its June lows with the 200-day line a clear resistance area. So this is an obvious time and place for the major indexes to pause or pull back.
For now, the market rally seems reluctant to cede much ground. Arguably, a bit more of a pullback would be constructive. It would let Apple and other stocks that have run up the right side of bases take a break and form handles.
But the market is going to do what it's going to do. The indexes could quickly run past the 200-day line or retreat sharply to the 50-day line, or worse.
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What to Do Now
Stocks tend to follow the market and industry trends. That's why it's so important to pay attention to the general market, adding exposure in confirmed uptrends and moving largely or entirely to cash in corrections.
With the market hitting resistance at the 200-day line, investors should wait before adding to net exposure. They could consider taking some partial profits.
But keep working on watchlists. A market pause that refreshes could create major opportunities.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
